NTEU v. FLRA

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 12-2574

NATIONAL TREASURY EMPLOYEES UNION,

Petitioner,

v.

FEDERAL LABOR RELATIONS AUTHORITY,

Respondent.

On Petition for Review of an Order of the Federal Labor
Relations Authority. (0-NG-3158)

Argued: October 29, 2013 Decided: December 6, 2013

Before TRAXLER, Chief Judge, and WILKINSON and FLOYD, Circuit
Judges.

Petition denied by published opinion. Judge Wilkinson wrote the
opinion, in which Chief Judge Traxler and Judge Floyd joined.

ARGUED: Peyton H.N. Lawrimore, NATIONAL TREASURY EMPLOYEES
UNION, Washington, D.C., for Petitioner. Zachary Robert Henige,
FEDERAL LABOR RELATIONS AUTHORITY, Washington, D.C., for
Respondent. ON BRIEF: Gregory O'Duden, General Counsel, Larry
J. Adkins, Deputy General Counsel, NATIONAL TREASURY EMPLOYEES
UNION, Washington, D.C., for Petitioner. Rosa M. Koppel,
Solicitor, FEDERAL LABOR RELATIONS AUTHORITY, Washington, D.C.,
for Respondent.
WILKINSON, Circuit Judge:

The National Treasury Employees Union (NTEU) sought to

amend its collective bargaining agreement with the Internal

Revenue Service (IRS) to permit probationary employees to use

the agreement’s grievance procedures to challenge removals

alleged to be in violation of statutory rights or procedures.

The IRS refused to negotiate over NTEU’s proposal on the grounds

that the proposal would grant probationary employees greater

procedural protections than were authorized under law and

regulation. NTEU appealed to the Federal Labor Relations

Authority (FLRA), which held for the IRS. NTEU now asks us to

reverse the FLRA and find its proposal negotiable. We decline

to do so because such a decision would ignore both the statutory

and regulatory frameworks that Congress and the executive branch

have put in place, create a stark circuit split, and overturn

nearly thirty years of settled public-employee practice.

I.

A.

Most federal agencies, including the IRS, are required by

law to “negotiate in good faith” with public-sector unions “for

the purposes of arriving at a collective bargaining agreement.”

5 U.S.C. § 7114(a)(4); see also id. § 7103(a)(3) (defining

“agency”); id. § 7116(a)(5) (listing the refusal to negotiate in

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good faith as an unfair labor practice); NRC v. FLRA, 25 F.3d

229, 231 (4th Cir. 1994). Such agreements must, subject to

certain limited exceptions, contain “procedures for the

settlement of grievances, including questions of arbitrability.”

5 U.S.C. § 7121(a)(1). A “grievance” encompasses “any complaint

. . . by any employee concerning any matter relating to the

employment of the employee.” Id. § 7103(a)(9). However, 5

U.S.C. § 7117 limits the good-faith-negotiation requirement to

provisions that are “not inconsistent with any Federal law or

any Government-wide rule or regulation.” Id. § 7117(a)(1); see

also NRC, 25 F.3d at 231.

Within the competitive service -- that part of the civil

service whose members are generally selected by open and

competitive examination, see 5 U.S.C. §§ 2102(a)(1), 3304(a),

(b) -- federal law distinguishes between probationary and non-

probationary employees. 5 U.S.C. § 3321 permits the President

to set up a “period of probation” for new employees “before an

appointment in the competitive service becomes final.” Id.

§ 3321(a).

The Office of Personnel Management (OPM) is tasked with

establishing the rules for the competitive service. Id. § 1301.

Pursuant to its authority, OPM has codified the rules for

probationary employees at 5 C.F.R. part 315, subpart H

(§§ 315.801-315.806). The rules set the length of the

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probationary period at a non-extendable one year from the start

of employment, 5 C.F.R. §§ 315.801(a), 315.802(a), and grant

probationary employees some protections against removal, such as

notice of a pending removal and limited rights of appeal to the

Merit Systems Protection Board (MSPB), id. §§ 315.804(a),

315.805, 315.806. The rules do not affirmatively grant

probationary employees the right to grieve removals alleged to

be in violation of statutory rights or procedures.

B.

NTEU sought to amend its existing collective-bargaining

agreement with the IRS to permit probationary employees to

grieve removals where “the grievance is confined to enforcing

the procedures or rights contained in a statute, and any

subsequent arbitration decision is controlled solely by the

requirements of law and government-wide regulation such that the

arbitrator is merely substituting for the federal authority that

would hear the employee’s challenge.” NTEU, 67 F.L.R.A. 24, 24

(2012) (emphasis added).

The IRS refused to negotiate over NTEU’s proposal, arguing

that it was outside § 7117’s duty to negotiate because it was

“contrary to law and regulation.” Id. The IRS argued that,

based on D.C. Circuit and FLRA precedent, probationary employees

may not grieve removals as a matter of law, and that such a

4
procedure would be contrary to the OPM regulations. Id. at 24-

25.

NTEU appealed to the FLRA, which ruled in favor of the IRS.

The FLRA cited nearly three decades of FLRA precedent holding

that collective-bargaining proposals violate § 3321 and the OPM

regulations to the extent they “grant probationary employees:

(1) separation-related procedural protections beyond those

required by statute or OPM regulations; or (2) the ability to

grieve separation disputes.” Id. at 26. Such proposals thus

fall outside of § 7117’s good-faith-negotiation requirement.

Relying upon two decisions by the D.C. Circuit, NTEU v. FLRA,

848 F.2d 1273 (D.C. Cir. 1988), and INS v. FLRA, 709 F.2d 724

(D.C. Cir. 1983), the FLRA reasoned that while probationary

employees have some rights to challenge removals in certain

administrative and judicial forums, they are authorized to

“receive only minimal due process in connection with their

separation,” which does not include the right to grieve

removals. Id. (internal quotation marks omitted).

NTEU appeals the FLRA’s decision. We must uphold the

decision “unless it is arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.” NTEU v.

FLRA, 647 F.3d 514, 517 (4th Cir. 2011). NTEU contends that we

should not defer to the FLRA’s interpretations of the OPM

regulations. It argues that the regulations are outside the

5
FLRA’s organic statute and regulatory domain, and are thus

“beyond the [FLRA’s] special area of expertise.” Appellant’s

Br. at 9 (citing Shanty Town Assoc. Ltd. P’ship v. EPA, 843 F.2d

782, 790 n.12 (4th Cir. 1988)). The FLRA responds that “[d]ue

deference is paid to an FLRA determination of negotiability,”

Appellee’s Br. at 8 (quoting NRC v. FLRA, 895 F.2d 152, 154 (4th

Cir. 1990)), while the FLRA’s interpretations of law outside its

organic statute and implementing regulations should be followed

“to the extent the reasoning is ‘sound,’” id. (quoting Ass’n of

Civilian Technicians, Tex. Lone Star Chapter 100 v. FLRA, 250

F.3d 778, 782 (D.C. Cir. 2001)). We need not entertain the

question of the specific level of deference the FLRA should

receive when interpreting the OPM regulations, however, inasmuch

as we conclude that the FLRA’s interpretation of the relevant

law and regulations was correct.

II.

NTEU’s argument is simple. Because Congress did not

exclude probationary employees from the definitions of

“employee” and “grievance” in 5 U.S.C. § 7103(a)(2), (a)(9),

probationary employees are generally covered by the grievance

procedure. And because Congress explicitly excluded some

disputes from the procedure –- such as those over examinations,

certifications, or appointments, id. § 7121(c)(4), or removals

6
for national-security reasons, id. § 7121(c)(3); see also id.

§ 7532 –- but did not explicitly exclude disputes over removals

generally, probationary employees should be able to grieve such

disputes where the removals are alleged to be in violation of

statutory rights or procedures. See Appellant’s Br. at 10-11.

As we explain below, this reading of the statute runs counter to

the whole statutory and regulatory scheme governing probationary

employees.

A.

Congress has provided for a probationary period since it

created the modern civil-service system with the 1883 Pendleton

Act, 22 Stat. 403, ch. 27 (amended 1978). See 22 Stat. 404, ch.

27, § 2(4); see also Kato v. Ishihara, 360 F.3d 106, 113 (2d

Cir. 2004); INS v. FLRA, 709 F.2d 724, 725 n.1 (D.C. Cir. 1983).

Congress’s continuing belief in the importance of a probationary

period was reflected in the passage of the Civil Service Reform

Act of 1978 (CSRA), 5 U.S.C. §§ 7101-7135, which both preserved

the probationary period for new employees and expanded it to

cover new appointments to managerial and supervisory positions.

Compare 5 U.S.C. § 3321 (1976) (authorizing the creation of a

“period of probation before an appointment in the competitive

service becomes absolute”), with 5 U.S.C. § 3321(a) (1982)

(authorizing the creation of a probationary period for both new

7
employees and appointments to managerial and supervisory

positions).

As the term “probationary” implies, employees so designated

are on probation and subject to summary dismissal. They are, of

course, just as entitled to be free of illegal or discriminatory

treatment from their employers as are non-probationary

employees, and thus NTEU is correct in arguing that its proposal

“is not designed to provide any substantive legal protections to

probationary employees that do not already exist.” Appellant’s

Br. at 19.

This does not mean, however, that Congress intended for the

same remedies to be available to probationary and non-

probationary employees. See NTEU v. FLRA (NTEU II), 848 F.2d

1273, 1276 (D.C. Cir. 1988). This is reflected in the numerous

ways that the law treats probationary and non-probationary

employees differently. For example, probationary employees are

explicitly excluded from the protections against demotion or

removal for unacceptable performance under 5 U.S.C. § 4303. See

5 U.S.C. § 4303(f)(2). These protections include written notice

thirty days in advance of the adverse employment action,

representation “by an attorney or other representative,” and a

final written decision. Id. § 4303(b)(1). Probationary

employees are not afforded the full rights that non-probationary

employees have to appeal a removal or demotion for unacceptable

8
performance to the MSPB. See id. § 4303(e). Similarly,

probationary employees do not possess the protections granted to

non-probationary employees against removals for such reasons “as

will promote the efficiency of the service.” Id. § 7513(a); see

also id. § 7511(a)(1)(A)(i). As the D.C. Circuit has

recognized, “The substantial protections that Congress made

available only to tenured employees indicate that Congress

recognized and approved of the inextricable link between the

effective operation of the probationary period and the agency’s

right to summary termination.” INS, 709 F.2d at 728.

Numerous other courts have recognized the important

distinction between probationary and non-probationary employees

and Congress’s intention to provide fewer protections to the

former. See, e.g., Bante v. MSPB, 966 F.2d 647, 650 (Fed. Cir.

1992) (“The language of the current statute establishes that

Congress clearly intends review of the termination of

probationary employees be more limited than that of other

employees.”); Booher v. USPS, 843 F.2d 943, 945 (6th Cir. 1988)

(“Congress, in enacting 5 U.S.C. § 7511, did not provide federal

remedies for probationary postal workers nor the full panoply of

administrative remedies as in the case of non-probationary

workers.”); United States v. Connolly, 716 F.2d 882, 886 (Fed.

Cir. 1983) (noting that “Congress could have permitted

probationers to challenge removals [in the Court of Federal

9
Claims], but expressly declined to do so”); Budnick v. MSPB, 643

F.2d 278, 279 n.2 (5th Cir. Unit B 1981) (per curiam)

(characterizing the “distinction between probationary and

tenured employees” as “sharp”).

Congress’s intention to grant probationary employees fewer

procedural protections against removal is clearly expressed in

the legislative history of the CSRA. As the Senate report

explains, “The probationary or trial period . . . is an

extension of the examining process to determine an employee’s

ability to actually perform the duties of the position. It is

inappropriate to restrict an agency’s authority to separate an

employee who does not perform acceptably during this period.”

S. Rep. 95-969, at 45 (1978). NTEU argues that, while this

language might support excluding removals for poor performance

from the grievance procedure, “it provides no evidence of a

congressional intent to prevent probationers from filing

grievances to protest removals in violation of statutorily

conferred rights.” Appellant’s Br. at 15. NTEU’s position

ignores the real-world result of its proposal: through artful

pleading, employees faced with a merit-based dismissal could

impose substantial costs on their employers by alleging

insubstantial statutory violations to access the grievance

procedures. Thus, NTEU’s proposal would “substantially thwart

10
Congress’s intention to allow summary termination of

probationary employees.” NTEU II, 848 F.2d at 1275.

B.

The Office of Personnel Management is the agency charged

with implementing Congress’s intent. See 5 U.S.C. § 1301; INS,

709 F.2d at 725 n.3. Pursuant to its statutory authority to

administer the competitive service, OPM has issued regulations

regarding the probationary period. OPM’s regulations faithfully

reflect Congress’s intention for the probationary program.

Granting probationary and non-probationary employees different

procedural protections is necessary to accomplish the

probationary period’s purpose, which the regulations describe:

“to determine the fitness of the employee and . . . terminate

his services during this period if he fails to demonstrate fully

his qualifications for continued employment.” 5 C.F.R.

§ 315.803(a).

In order to balance the rights of probationary employees

against unlawful removals with the government’s need for

flexibility and discretion in removing them, OPM has explicitly

granted probationary employees a number of protections. They

are entitled to written notification and explanation of a

dismissal for unsatisfactory performance or conduct, id.

§ 315.804(a), as well as notice of a proposed removal,

opportunity for reply, and notice and explanation for the

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removal in cases where the removal is based in whole or in part

on conditions arising before the probationer’s employment, id.

§ 315.805. Probationary employees also have limited rights of

appeal to the MSPB: they may challenge removals based on

partisan political reasons or marital status; improper

procedures; or other forms of discrimination, if such

discrimination is accompanied by terminations based on partisan

politics, marital status, or improper procedure. Id. § 315.806.

Two features stand out from this review of OPM regulations

regarding probationary employees. First, the regulations are

extensive, encompassing a wide range of disputes and remedial

procedures. They give probationary employees both fair notice

of removal and the right to appeal those removals in certain

circumstances. Second, they sharply limit probationary

employees’ rights to challenge removals. In doing so, they

preserve a meaningful distinction between probationary and non-

probationary employees in accordance with the language and

purpose of the statutory scheme. The structure of the OPM

regulations indicates that any additional protections not

explicitly provided for -- such as those in NTEU’s proposal --

would conflict with the regulations and thus be outside the

IRS’s bargaining obligations.

NTEU correctly observes that probationary employees have

remedial options beyond those granted by OPM. See Appellant’s

12
Br. at 16-17. Indeed, in some contexts their avenues for relief

are much the same as those afforded non-federal employees. They

may file charges of unfair labor practices with the FLRA’s

general counsel, see 5 U.S.C. § 7118(a)(1), and may file

complaints of discrimination with the Equal Employment

Opportunity Commission and ultimately in federal court, see 42

U.S.C. § 2000e-16(c); 29 C.F.R. § 1614.407. The availability of

these remedies, however, does not imply the permissibility of

other remedies, among which is NTEU’s proposed expansion of the

grievance procedure. * In sum, Congress has clearly granted

certain remedies to all employees, including probationary ones.

By contrast, Congress refrained from granting probationary

employees the right to grieve removals in violation of statutory

rights or procedures, thereby giving OPM, which prescribes the

rules for the competitive service, the discretion whether or not

to grant such a right. If we were to step in and declare

proposals to grieve such allegations negotiable, when neither

*
NTEU cites the Supreme Court’s recognition of a “liberal
federal policy favoring arbitration agreements” to support its
position. Appellant’s Br. at 24 (quoting Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991)); see also
id. at 24-25 (citing pro-arbitration language in 14 Penn Plaza
LLC v. Pyett, 556 U.S. 247 (2009)). But that general principle,
articulated in a case between private parties under a different
statute and having nothing to do with the unique employment
status of federal probationary employees, can hardly require a
federal agency to negotiate over a proposal that, as here, would
clearly violate law and regulation.

13
Congress nor OPM has done so, we would risk unraveling what, by

any measure, is a meticulously crafted statutory and regulatory

scheme.

III.

We are not the first court to arrive at this outcome. The

District of Columbia Circuit addressed this issue in a pair of

cases more than twenty-five years ago. It came to the same

result we arrive at today, and we find no reason to quarrel with

or depart from its conclusions.

The D.C. Circuit first addressed the availability of

grievance procedures for probationary employees challenging

removals in INS v. FLRA, 709 F.2d 724 (D.C. Cir. 1983). In that

case, the INS labor union proposed that probationary employees

be able to grieve all removals on the basis of whether they were

“reasonable and not arbitrary and capricious.” INS, 709 F.2d at

726 (internal quotation marks omitted). The FLRA had ruled that

permitting probationary employees to grieve terminations would

not violate the statutory scheme, and thus that INS was required

to negotiate over the proposal. In reversing the FLRA, the D.C.

Circuit emphasized Congress’s intent to provide probationary

employees with fewer protections against removal and the

incompatibility of the union’s proposal with that goal. See id.

at 728-29. As have we, it quoted from the Senate report in

14
concluding that Congress did not intend to impede the ability of

managers to summarily dismiss probationary employees. See id.

at 727-28.

The court revisited the issue five years later, in NTEU v.

FLRA (NTEU II), 848 F.2d 1273 (D.C. Cir 1988). In that case,

NTEU had proposed a provision, very similar to the one at issue

here, allowing probationary employees to grieve removals that

were “the product of unlawful discrimination.” NTEU II, 848

F.2d at 1274 (emphasis and internal quotation marks omitted).

The D.C. Circuit again rejected the proposed expansion of

probationary employees’ grievance rights. It held, as it had in

INS, that Congress’s failure to exclude probationary employees

from the definitions of “employee” and “grievance” in 5 U.S.C.

§ 7103(a) did not imply that probationary employees could grieve

removals alleged to be discriminatory. Instead, it read the

relevant sections against the background of “Congress’s

expressed intent for the probationary period,” which included

“agencies’ right to fire probationers with minimal procedural

obstacles.” Id. at 1276.

While accepting INS, NTEU argues that NTEU II was wrongly

decided. It bases its criticism of NTEU II in large part on the

claim that the NTEU II court failed to consider the Senate

report language that underlay the INS decision. NTEU argues

that this language was limited to removals for poor performance

15
rather than those alleged to be in violation of statutory rights

or procedures. See Appellant’s Br. at 15. But, as we have

already explained, see ante at 10, this argument ignores the

reality that permitting probationary employees to grieve

removals based on a mere allegation of violation of statutory

rights or procedures would eviscerate the entire purpose of the

probationary program.

We agree fully with the approach and outcome of the

aforementioned opinions, as have several of our sister circuits.

See Yates v. Dep't of the Air Force, 115 F. App'x 57, 58-59

(Fed. Cir. 2004) (per curiam) (quoting INS approvingly); HHS v.

FLRA, 858 F.2d 1278, 1284-85 (7th Cir. 1988) (citing INS and

NTEU II approvingly). But even were our judgment more

ambivalent, there would be costs in this area to holding

differently and creating a circuit split. To give probationary

employees different procedural rights depending on the circuit

in which they live or work would create confusion and inequity

in the federal civil service. See 5 U.S.C. § 7123(a)

(permitting appeals of FLRA orders in the circuit “in which the

person resides or transacts business”). Nothing in law commands

such disregard of practicality, and the practical drawbacks of

petitioner’s position are substantial.

16
 IV.

Finally, the issue of administrative precedent counsels in

favor of upholding the FLRA. NTEU would have us upset nearly

thirty years of FLRA decisions holding that probationary

employees are not permitted under law or regulation to grieve

removals. See, e.g., NFFE, Local 29, 20 F.L.R.A. 788, 790

(1985); SSA, 14 F.L.R.A. 164, 164-65 (1984). The FLRA has

reasserted this holding numerous times since those early

decisions. See, e.g., NTEU Chapter 103, 66 F.L.R.A. 416, 418

(2011); NTEU, 45 F.L.R.A. 696, 718 (1992).

The uniform course of court and agency decisions has made

it clear for decades that probationary employees cannot grieve

separation disputes, including those alleging violations of

statutory rights or procedures. Both Congress and OPM

understand this and have taken no action over these many years

to change this reality. There is value in having settled

practice remain settled practice, especially when the bodies

that have every right to change it have made no move to do so.

V.

For the foregoing reasons, we hold that NTEU’s proposal was

contrary to law and regulation and thus outside the IRS’s

17
statutory duty to negotiate. The NTEU’s petition for review is

hereby denied.

PETITION DENIED

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